Some of SteelHouse's former clients are now supporting Criteo's allegation that it runs a c...

Datetime:2016-08-23 04:42:00          Topic:          Share

Eric Eichmann, Criteo CEO. Criteo

Things are heating up in the "click fraud" lawsuit between the French public ad tech company Criteo and its US-based competitor SteelHouse.

A quick summary of the case so far:

  • Lots of retailers measure the performance of their ad tech vendors using a method called "last click attribution," which gives credit to whichever company served the last ad a user clicked on before landing on a website.
  • Criteo filed a lawsuit in a California court in June that alleged SteelHouse ran a "counterfeit click fraud" scheme which led to "substantial injury and damage" to its business and reputation. Criteo claimed it had lost business because SteelHouse used a method to falsely take last click credit for visits to retailer's web pages.
  • SteelHouse denies the claims. In July, SteelHouse responded by filing counterclaims , alleging the suit was an attempt to "bully a smaller company." SteelHouse said it has a "unique business model," which doesn't just focus on clicks. The countersuit also alleged Criteo "regularly injects adware" into users' personal computers, serves ad impressions through that adware, and buys inventory from "non-reputable sources" in order to drive up its click numbers.

On Monday, Criteo filed further documents to support its request for the court to impose an injunction on SteelHouse, which would prevent it from continuing to carry out such alleged behavior. Criteo is also seeking damages. (You can read the reply filed with the courthouse below.)

As well as dismissing SteelHouse's counterclaims, Criteo has also persuaded five former clients of SteelHouse to sign declarations to demonstrate how they were, in Criteo's words, "deceived" by SteelHouse's actions.

In a statement, Criteo said:

"On August 15, 2016, Criteo filed papers in further support of its request to the Court to enjoin SteelHouse from its continued misconduct as well as to dismiss SteelHouse’s baseless counterclaims, which are nothing more than an attempt to divert attention from SteelHouse’s own wrongdoing and sham explanations for it. Criteo alleges that SteelHouse used a counterfeit click fraud scheme to trick e-tail clients into thinking that internet users clicked on SteelHouse-placed ads when they did not, and, consequently, to take credit for online sales attributable to Criteo, other online marketing vendors, and from e-tail clients’ own direct internet traffic. In support of these allegations, Criteo filed a Motion for Preliminary Injunction with substantial supporting evidence documenting SteelHouse’s behavior.

"In Opposition to Criteo’s Preliminary Injunction Motion, SteelHouse claimed it was entitled to engage in this conduct and that its conduct is acceptable industry practice. SteelHouse clients have responded with sworn testimony showing that this is false. These clients have offered specific and detailed testimony to explain how they were deceived by SteelHouse, and industry experts have also submitted sworn statements clearly demonstrating that SteelHouse’s conduct is not acceptable industry practice. SteelHouse’s conduct has irreparably harmed, and continues to irreparably harm, Criteo, its clients, and the online advertising industry as a whole. Criteo will continue to vigorously prosecute its claims against SteelHouse in an attempt to stop SteelHouse’s misconduct."

SteelHouse provided Business Insider this statement: "Criteo’s response in its latest filing finally frames the actual debate at hand without the inflammatory accusations. When you boil it down, the debate is about flexibility. SteelHouse offers flexible attribution support; Criteo doesn’t."

Here is a summary of the five former SteelHouse Client's declarations:

VistaPrint channel marketing lead, Elyse Burns:

VistaPrint had carried out its own investigation using a web developer debugging system to see whether SteelHouse was falsely attributing clicks.

Burns navigated to the VistaPrint site via search and left the browser on overnight. The declaration states she discovered that, without taking any action, the browser had reloaded the webpage on its own. As a result, the visit no longer had tracking code reflecting that she had reached the site by search, but instead reflected the visit occurred as the result of a SteelHouse ad, according to the declaration.

Burns declaration claims SteelHouse "stole credit" for those clicks, which led to a reduction in the revenue it distributed to other ad tech vendors.

VistaPrint senior specialist in external marketing, Leah Bliss:

Bliss' declaration states VistaPrint discovered SteelHouse used "malicious code to make it appear as though an internet user clicked on a SteelHouse-placed advertisement, even though no such click occurred."

Upon discovery of this, VistaPrint terminated its contract with SteelHouse, according to the declaration.

BodyBuilding.com manager of information delivery and analysis, Aaron Bostrom:

Bostrom's declaration states that BodyBuilding.com ran a head-to-head comparison of SteelHouse and Criteo. SteelHouse won the comparison, so BodyBuilding.com stopped using Criteo.

But then Bostrom became suspicious. According to the declaration, BodyBuilding.com found more than half of SteelHouse's clicks registered on a second-page visit after a user had previously navigated to that page. That's confusing because usually a click would lead to the first page: you see an ad, click it, and get directed for the site.

For a second-page visit to have occured, the user would have to have been on the site already, navigated away, be served an ad, then quickly navigate back. The declaration also claims that these second-page clicks were occurring "rapidly," typically within 80 seconds of a user first visiting the site.

"While such behavior is not impossible, it is highly improbable," the declaration says.

Bostrom says in the declaration he was told by SteelHouse this behavior was the result of a "bug" that had been fixed in May. But BodyBuilding.com decided to serve SteelHouse a service suspension and demand a full refund.

Toms former online demand generation manager, Anna Hordov

After being given $15,000 of free media to trial SteelHouse's services, Toms decided to stop using Criteo exclusively and split its budget between the two as a result.

For a brief time, Toms paused its activity with Criteo but found that SteelHouse's conversion rates did not improve, despite it being its sole retargeting supplier during the period, according to the declaration.

In January, Criteo provided analysis showing that, directly after a click on a different marketing channel, SteelHouse would fire its own code so it would look as though a user had clicked on one of its ads, according to the declaration.

Hordov says in the declaration: "I spent months believing that SteelHouse’s numbers was based solely on clicks and post-click conversions. SteelHouse’s conduct made it appear to perform better than it actually was performing. Toms made spending allocation decisions and marketing vendor choices based on SteelHouse’s inflated performance."

Deckers director of ecommerce, marketing and merchandising, Jackson Graham McCulloch:

Deckers decided to switch from Criteo to SteelHouse after performing a head-to-head comparison between the two, according to the declaration.

Criteo then contacted Deckers in May to point out alleged data irregularities within SteelHouse's tracking codes, according to the declaration.

Deckers looked at its Adobe log files and found that more than 50% of SteelHouse-attributed clicks followed 10 seconds after a page view, the declaration states. McCulloch says in the declaration this showed an "unrealistic" amount of time for someone to leave the site, go to another site, be served an ad, and then click on it.

The declaration states: "SteelHouse's practice of inserting a code into an internet user’s browser to make a view of an advertisement appear indistinguishable from a click on Decker’s Adobe Analytics system is not, in any way, common or acceptable industry practice. Nor should it be because it is deceptive."

The case continues. A court hearing is set for August 29.

Criteo's reply to SteelHouse's countersuit: